Newly unsealed documents in a lawsuit against Navient, one of the nation’s largest student loan management companies, provide insight into the loan servicer’s use of a questionable repayment plan.

But while consumer advocates view the documents as damning evidence of Navient placing profits over people, some higher education experts say they show the company following the law.

The debate centers on an internal memo written in 2010 by Matt Bailer, a senior director at Sallie Mae, Navient’s former parent company, detailing strategies for servicing federal student loans. At one point in the memo, Bailer says, “Our battle cry remains, ‘Forbear them, forbear them, make them relinquish the ball.’ Said another way, we are very liberal in our use of forbearance once it has been determined that a borrower cannot pay cash or utilize other entitlement programs.”

He added: “Generally speaking, out of every 10 resolved [Education Department] borrowers, seven will forbear, one will pay cash, and two will use deferment or some other entitlement. That mix is likely to change over time as we improve our ability to communicate the benefits of and fulfill other programs such as income-based repayment.”

Navient has been locked in litigation with the Consumer Financial Protection Bureau since 2017 over alleged widespread abuses in the collection of education debt payments.

Among the most serious allegations in the complaint is that Navient encouraged borrowers to postpone payments through forbearance, an option in which interest continues to accrue, rather than enroll them in an income-driven repayment plan that would avoid fees. The consumer bureau said the practice cost borrowers up to $4 billion in interest from January 2010 to March 2015, a claim Navient disputes.

Companies such as Navient, Great Lakes and FedLoan Servicing are paid millions of dollars by the federal government to collect student loan payments, guide people through the thicket of repayment options and help borrowers avert default.

Consumer advocates say loan servicers steer borrowers toward forbearance because it requires substantially less paperwork than enrolling them in low-cost plans that peg monthly payments to a percentage of income.

“The evidence unsealed in federal court confirms that Navient’s practices that added billions of dollars of debt to struggling borrowers emanated from the top echelon of the company,” said Seth Frotman, executive director of the Student Borrower Protection Center, an advocacy group. “The time has come for policymakers to admit this company’s practices are predatory and corrupt — it should not be given a single additional taxpayer dollar.”

Navient has long countered that it has one of the highest rates of enrollment in income-driven plans, denying that there is a nefarious plan afoot to deprive borrowers of that option. The company said the consumer bureau has mischaracterized the memo, choosing to ignore that it discusses forbearance as a way to help borrowers resolve delinquencies and avoid default.

Another part of the memo said the company wanted to provide borrowers “the optimal solution based on their unique circumstances.” Another document instructs representatives that “forbearance should not be considered until all other options have been exhausted.”

“These documents clearly show that Navient educates our borrowers about income-driven and other repayment options — any suggestion otherwise is a distortion of the facts,” Mark Heleen, general counsel for Navient, said in an email. “After a nearly six-year legal process, the CFPB has failed to produce a single student loan borrower to support their baseless claims against Navient.”

Jason Delisle, a resident fellow at the conservative think tank American Enterprise Institute, said the entire memo makes it clear that Navient was trying to reduce defaults, with an eye toward placing borrowers in more sustainable solutions.

“The whole nature and tone of the memo seem totally within the normal functioning of the federal student loan program,” Delisle said. “It doesn’t look like some sort of conspiracy whatsoever.”

The documents that included the memo were filed by the consumer bureau in March in response to Navient’s motion for partial summary judgment. The company initially fought to keep the documents under wraps but asked the federal court to release them in full when the consumer bureau requested that a limited number of documents be unsealed.

In addition to the memo, the consumer bureau also filed internal emails and testimony from employees. One document shows that the head of all four of Navient’s call centers stated that he had not been aware, during most or all of his tenure from 2011 to 2012, that income-driven repayment was even an option for struggling borrowers. Another includes call summaries of when borrowers were placed in forbearance although the company acknowledged that they may have qualified for income-based repayment.

“These documents support our repeated calls for robust standards and better enforcement at the federal and state level for student loan servicers,” said Ashley Harrington, senior policy counsel at the Center for Responsible Lending, an advocacy group. “It’s time for the federal government, especially the Department of Education, to ensure more accountability and transparency for the servicers they contract with to handle student loans.”

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